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The Purchase of a Worker's Compensation Insurance Policy Does Not Necessarily Mean the Purchaser is an Employer Covered by the Wisconsin Worker's Compensation Act

In the recent case of Lloyd Frank Lodging v. Healy, the Wisconsin Court of Appeals held that the purchase of a worker’s compensation insurance policy does not necessarily make a person an employer subject to the Worker’s Compensation Act (the “Act”).

The Labor and Industry Review Commission had determined that Healy, who had been injured while cutting trees for Lloyd Frank Lodging, was an employee of Lloyd Frank for purposes of worker’s compensation.  The circuit court affirmed the Commission’s decision.

Lloyd Frank argued on appeal that Healy was an employer, and not Lloyd Frank’s employee, because Healy had purchased a worker’s compensation insurance policy.  The court of appeals rejected the argument.

Healy maintained a policy for his sole proprietorship, Charles Healy Four Seasons, but he never employed anyone at Four Seasons other than himself.  While Lloyd Frank argued that Healy elected to be an employer subject to the Act when he purchased a worker’s compensation policy, the court of appeals held that the mere fact that Healy carried worker’s compensation insurance did not make him subject to the Act.  Instead, Healy had to fall within the Act’s definition of an “employer” before he could elect to be covered under the Act by purchasing an insurance policy.

Because Healy had never employed anyone and did not otherwise meet the statutory definition, he was not an employer.  The court of appeals therefore held that the Commission properly determined Healy was Lloyd Frank’s employee for purposes of the Act at the time he was injured.

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